Colin David Rath, 59, sailed to NZ on the yacht Persevere with his family in 2016. Today he was jailed for committing tax fraud to the tune of $1.3 million. Photos / Supplied
Colin David Rath, 59, sailed to NZ on the yacht Persevere with his family in 2016. Today he was jailed for committing tax fraud to the tune of $1.3 million. Photos / Supplied
A former high-flying New York property developer who sailed to New Zealand on a luxury yacht to open a vineyard has been jailed for committing tax fraud to the tune of $1.3 million.
Colin David Rath, 59, appeared at the Christchurch District Court on Wednesday where he gave his wifea hug before he was taken into custody to begin his sentence.
In December, Rath pleaded guilty to 39 charges of using a document for a pecuniary advantage relating to GST returns, and two charges of forgery - one relating to Inland Revenue Department documents and the other involving Immigration New Zealand.
Rath’s lawyer Stephen Lukey said reports provided to the court show Rath was remorseful and was making amends for his offending in was such as taking steps to sell his remaining property.
During the hearing, Rath told his lawyer there were a number of options for reparation including selling his whole business, however, no reparation has been paid to date.
The reports said Rath acknowledged he had let his wife and daughters down.
Colin Rath was behind the Fiddlers Green winery in North Canterbury. Photo / Supplied
“These are the people I love the most,” he was recorded as stating. “I did defraud the system but I needed a way to cover my costs.”
Paul Saunders, prosecutor for Inland Revenue, questioned whether Rath’s display of remorse and willingness to make amends was genuine, pointing out that his sale of a Tesla had benefited his family.
Saunders said good character references provided to the court showed Rath had a “very privileged” background, more so than most defendants that appear before a judge.
Judge Quentin Hix said Rath was supported by his family and well-respected in the community, particularly in America where he lived for some time.
It was unfortunate he had “crossed a line” by engaging in illegal activity and he had no previous convictions, the judge said.
Judge Hix gave Rath discounts for guilty pleas, remorse, efforts towards reparation, good character including his previous involvement with charitable organisations and lack of previous convictions.
Following the credits, Rath was sentenced to three years and seven months in prison.
But before he was taken into custody, he embraced his wife and then asked if he could have a glass of water.
The Offending
Rath sailed to New Zealand on a luxury yacht with his family in 2016.
The following year, he started a winery business in the Waipara wine-growing region in North Canterbury.
However, his businesses, Waipara Winds Ltd which traded as Fiddler’s Green restaurant and vineyard, and New York Grape Escape Ltd, struggled.
Rath started doctoring invoices from different businesses, including builders, marketing companies and other professional service providers, to file falsified goods and services tax (GST) returns
Over a four-year span, through his two companies, Rath filed 39 false GST returns.
In support of them, he prepared 85 forged documents.
He also used 13 forged documents purporting to be from Inland Revenue in support of an entrepreneur residency visa application to Immigration New Zealand.
Inland Revenue, who brought the prosecution against Rath, said he was given just over $1.3m in refunds.
Rath advised Inland Revenue that Waipara Winds Ltd was renovating and improving the land and property of the vineyard to begin to produce more sustainable income through a restaurant, bed and breakfast, and new crops to augment and increase the grape and wine production.
He was advised the GST affairs of the company were under audit on May 6, 2021.
The April 2021 GST return recorded an expenditure of $1.6m, of which $967,000 related to a “spec house”, “subdivision costs”, and payments for work on “B&B”.
Rath told Inland Revenue investigators he would like to arrange a visit so he could show them the assets that the expenditure related to. He asked that the visit be as soon as possible so the refund could be released.
On May 7, 2021, he took two investigators for a tour of the company’s property. The tour included him pointing out the subdivision for five new sections, as well as pointing out the “spec house” which did not have access from the vineyard.
While showing the house, Rath looked under a rock for the keys but said his wife must not have put them back when there the day before.
He said the investigators could look through the windows. The officers noted furniture in the house, with Rath saying it was staging furniture as the house was getting ready for sale at the end of the month.
Rath provided a copy of the contract with a building company for the “spec house” and also a copy of the subdivision plans, which was a printout of a satellite view of the property with lines drawn on it by a marker pen.
He said the surveyor was away, but he could get more information in a few weeks. The April 2021 GST return included expenses of $103,000 to the surveyor.
Colin Rath was sentenced at the Christchurch District Court on Wednesday. Photo / George Heard
But a search of the address of the house Rath had taken the investigators showed it was owned by a third party unrelated to him or his companies. The owner confirmed he had finished building the home about one year ago. He was not aware of Inland Revenue’s visit and confirmed he had not given Rath permission to take them to his house.
The building company named in the contract for the “spec house” advised they had completed work for Waipara Winds Ltd in 2017 for about $16,000. They had not issued tax invoices since then or received payments.
With each GST return, Rath provided false information such as a copy of a US bank account that had been doctored.
On his website, the Connecticut-raised Rath describes himself as a “successful entrepreneur, Manhattan real estate developer, and author”.
He wrote the book It is what it is: A true Manhattan real estate nightmare with a silver lining which recounts his experiences during the 2000s New York property boom.
A New York Times article in 2015, which referenced him having owned a US$3.4m ($4.7m) luxury apartment in Manhattan with two waterfalls feeding a koi pond in the living room, also signalled his intentions to live in New Zealand, saying “this is not the America I knew”.
